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Walmart Marks ‘Strong’ Q2

Comps up at home and abroad: CEO/Prez

August 15, 2012, 08:00 pm

Wal-Mart Stores Inc. has posted net sales for the second quarter of its fiscal 2013, which ended July 31, of $113.5 billion, an increase of 4.5 percent from $108.6 billion in the year-ago period. Net sales for the second quarter of fiscal 2013 included a negative currency exchange rate impact of about $2.2 billion, without which net sales would have been $115.7 billion. Sam's Club membership and other income grew 4.7 percent to $762 million, and total revenue was $114.3 billion, a rise of 4.5 percent from last year.

Income from continuing operations attributable to Walmart for the quarter came to $4.0 billion, a 5.7 percent increase from the second quarter last year. Diluted earnings per share (EPS) from continuing operations attributable to Walmart for the second quarter of fiscal 2013 were $1.18, versus $1.09 last year.

“Walmart had a strong second quarter, and I’m pleased with the earnings and overall results,” said Mike Duke, president and CEO of Bentonville, Ark.-based mega-retailer. “We had positive comp sales in Walmart U.S. and Sam’s Club, as well as each of our international markets, reinforcing that customers rely on Walmart to help them save money and live better.”

The company leveraged operating expenses for the second quarter, succeeding in its goals to reduce costs, boost productivity and invest in price. “Our intense focus on delivering productivity initiatives and reducing costs allowed us to invest in lower prices for our customers and to deliver strong profitability for shareholders,” continued Duke, who also noted the solid performance of the company’s three operating segments.

Walmart U.S. stores saw three consecutive quarters of positive comp traffic and four straight quarters of positive comp sales, which Duke attributed to a concentration on broad assortment and price leadership; Sam’s Club had strong comp sales for the quarter, driven by innovative merchandising and services; and Walmart International experienced improved sales and profitability as it worked to achieve greater balance between profitability and returns through improved operational and sales productivity.

The company acknowledged, however, that customers still face daunting economic challenges. “The paycheck cycle remains pronounced in the United States and in our International markets,” Duke said. “Given continuing economic pressures, we believe that our price leadership and value are growing in importance to customers across income levels.”

During the second quarter, both comp ticket and traffic increased for Walmart U.S., and both grocery and general merchandise saw positive comp sales. “Our comp-sales momentum continued through the second quarter, with July being one of our strongest months,” noted Walmart U.S. president and CEO Bill Simon. “All three geographic business units and all store formats had positive comp sales. Customers are responding to our continued focus on providing the right assortment at everyday low prices, and are shopping the entire store. We have a powerful strategy and I’m confident in our ability to deliver sustained strong financial performance.”

At Sam’s Club, comparable traffic and ticket, excluding fuel, grew for both Business and Advantage members for the 13-week period ended July 27. “We believe that the improvements in our quality and overall merchandise offerings are key to driving these results,” said Sam’s Club president and CEO Rosalind Brewer. “Member engagement scores continue to achieve record levels, and we’re investing in price to deliver greater value to our members.”

Walmart, which operates 10,351 retail units under 69 banners in 27 countries, issued third-quarter fiscal 2013 guidance for diluted EPS from continuing operations of between $1.04 and $1.09, comparable to last year’s third-quarter reported EPS of $0.97. Walmart raised and narrowed its full-year EPS guidance to a range of $4.83 to $4.93, from a previous range of $4.72 to $4.92. Last year’s full-year EPS was $4.54.